Money Watch: Weekly Wrap
Before getting into the week in review, two news items of note broke this weekend:
- Bernie Madoff's son Mark committed suicide in his SoHo apartment on the two-year anniversary of the elder Madoff's arrest for conducting a $65 billion Ponzi scheme
- Chinese inflation soared to 5.1 percent in November, the fastest pace in 28 months. Investors expect that the Chinese will be forced to raise interest rates again.
Despite the grandstanding by many Democrats (Sen. Bernie Sanders (I-Vt.) ended a marathon filibuster of the proposed tax compromise, after more than 8 1/2 hours with the understatement of the week: "It has been a very long day"), the plan is likely to pass with minor changes. The current schedule is for the Senate to vote on the legislation on Monday at 3:00 pm. The House of Representatives is expected to vote later in the week, and then Congress plans to adjourn for the year on Friday.
Investors liked the tax plan and believe that its passage would help boost growth in the economy by approximately 0.5% next year. As a result, stocks moved higher on the week-the NASDAQ and S&P 500 both reached two year highs.
- DJIA: 11,410, up 0.25% on week, up 9.4% YTD
- S&P 500: 1240, up 1.2% on week, up 11.2% YTD (highest close since 9/19/08, after the Lehman Brothers collapse)
- NASDAQ: 2637, up 1.8% on week, up 16.2% YTD (up 4.74% over the past three weeks)
- January Crude Oil: $87.79, down 1.6% on week
- February Gold: $1384.90, down 1.5% on week
FACTOIDS OF THE WEEK:
- Since President Obama's inauguration on Jan. 20, 2009, the S&P 500 is up 54 percent
- The latest poll of its membership by the American Association of Individual Investors showed 53 percent were bullish, 22.6 percent bearish and 24.4 percent weren't quite sure. Some analysts believe when bullishness exceeds bearishness by more than 30 percent, it's a contra-indicator-i.e. when the little guys get excited, it's usually the beginning of the end
- Then again, pros seem to be optimistic as well--according to the Investors Intelligence, 56.2 percent were bullish and 21.3 percent were bearish
IN THE WEEK AHEAD: It will be a busy week beyond the vote on tax cuts. Retail sales are expected to rise; housing starts and building permits are likely to remain at extremely low levels; and PPI and CPI should rise slightly. It is expected that the Fed will leave monetary policy unchanged at the last meeting of the year, but as always, investors will parse the decision, to see if there are any shifts-no matter how subtle-in the official statement.
Mon 12/13:
3:00 Senate Vote on Tax Cuts
Tues 12/14:
8:30 Producer Price Index
8:30 Nov Retail Sales
2:15 FOMC Meeting announcement
Weds 12/15:
8:30 Consumer Price Index
9:15 Industrial Production
10:00 Housing Market Index
Thurs 12/16:
8:30 Weekly Claims
8:30 Housing Starts
10:00 Philadelphia Fed Survey
Fri 12/17:
Quadruple Witching: When contracts for stock index futures, stock index options, stock options and single stock futures all expire--can lead to volatility in the market
10:00 Leading Indicators
